The headline crossed my phone last night after the close…
“Walt Disney: ESPN, FOX (FOXA,FOX) and Warner Bros. Discovery (WBD) confirm they have reached an understanding on principal terms to form a new Joint Venture to build an innovative new platform to house a compelling streaming sports service”
As soon as I saw it, I thought… “this is the beginning of the end game for streaming.” The beginning of a consolidation that results in three “providers” down the road…
Three companies that will hold all the streaming magic that we’ve become addicted to, and they’ll make all the money.
If you’re anywhere near my age, the feeling is familiar. Having three networks that control 90% of the content on your TV. It’s not likely to look that extreme, but closer than where we are today.
Where are we today? The streaming river has gotten too wide and shallow. I literally spend more time searching for “where” I can watch a show than I spend watching it sometimes.
NBC probably dropped the straw that broke the camel’s back a few weeks ago when they put access to a few of the NFL’s games behind their crappy Peacock+ streaming service.
Sure, they grabbed 2.8 million new subscribers by holding the Kansas City Chiefs and Miami Dolphins game hostage, but the whiplash on the NFL for allowing the hostage situation to occur has sent a broader message… stop the streaming madness.
Full disclosure, I am one of the 2.8 million that signed up for Peacock to see that game. I’ve since binged the entire Yellowstone series and then cancelled the service. Also, I chose the advertising subscription model. I forgot how convenient the commercials are for a bathroom break or to refresh a drink. Just a tip from me to you.
Here’s another tip: There are going to be three winners in this game over the next three years. You’ll want to own each in your portfolio.
Bottom Line
Three winners will emerge in the great streaming consolidation…
Winner 1, Netflix (NFLX) – The king is back! We talked about that a few weeks ago, and we’ll continue talking about it over and over for the next year. Netflix is taking back what was originally theirs as they are clawing millions of subscribers back from Disney, Hulu, and everyone else. Less expensive original content along with licenses for the network shows we love is their game, and it will put them in the driver’s seat for streaming’s consolidation.
Winner 2, Amazon (AMZN) – Amazon Prime has always been a follower, but that’s looking like it will change. More original content, movies, and a growing sports franchise will start moving Amazon Prime to the top of the streaming board.
Winner 3, Disney (DIS) – The company will announce earnings this afternoon, and I’m expecting to hear a lot about their streaming plans. Keep in mind, I think that Disney+ is crap (right along with Peacock) but remember that Disney is the majority owner of Hulu, and that’s the third streaming service that I see dominating the market over the next three years. Hulu and ESPN will be the combination for the streaming win for Disney.
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About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.